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May 4, 2012

Top Portfolio Products: Russell, Barclays Introduce New Index Series

New products introduced over the last week include a new series of investment benchmarks from Russell and Barclays and a new hedged value fund from RiverPark. In addition, Allianz Life introduced a new variable annuity rider and Jackson National Life introduced a new VA option.

Here are the latest developments of interest to advisors:

1) Russell Investments and Barclays Introduce LDI Index Series

Russell Investments and Barclays announced on Wednesday the creation of a new set of investable liability-driven investment (LDI) fixed-income benchmarks for U.S. corporate pension funds. The Barclays-Russell LDI Index Series offers pension fund investors a standard set of rules-based and transparent fixed-income benchmarks that are designed to offer better liability tracking properties than traditional benchmarks currently in use.

The series consists of six high-quality, mostly corporate-bond-based, benchmarks with target durations of 6, 8, 10, 12, 14, and 16 years. Each LDI index is reconstituted annually back to the targeted maturity minimum range to reflect changes in market yields while minimizing turnover, and rebalanced monthly to remove bonds falling below the maturity threshold or quality standard and add newly issued bonds that qualify.

Issuer concentration is reduced through a 2% issuer cap. When using the series, investors will be able to select a single LDI index or a combination to most accurately reflect their specific liabilities.

2) RiverPark Introduces RiverPark/Gargoyle Hedged Value Fund

RiverPark Advisors LLC announced Thursday that it has introduced the RiverPark/Gargoyle Hedged Value Fund (RGHVX).The new fund is a conversion of the Gargoyle Hedged Value Fund L.P., which has a 12-year performance record as a hedge fund.

It is subadvised by Gargoyle Investment Advisor L.L.C., with Gargoyle’s co-founders Alan L. Salzbank and Joshua B. Parker as co-portfolio managers; they have acted as co-portfolio managers on the Gargoyle Hedged Value Fund L.P. since its inception.

RGHVX employs value-oriented stock investing and index option overwriting in seeking to provide long-term capital appreciation with lower risk than the broad stock market. It will generally stay fully invested in the equity securities of medium- to large-capitalization companies, currently defined as those with a minimum of $1.5 billion in market value.

Plus, it will partially hedge the stock portfolio by selling near-term index call options. RGHVX is being offered in two share classes, retail and institutional, with expense ratios of 1.50% and 1.25% respectively.

Allianz Life Insurance Company of North America, and in New York, Allianz Life Insurance Company of New York recently announced the launch of the optional Income Focus rider on Allianz Vision, Allianz Vision New York and Allianz Connections variable annuities. Available in 48 states, the optional rider offers payment percentage increases of 1% every year the contract experiences positive performance, no matter the size of the increase. There is no limit on the number of income increases, up to age 91, whether the contract holder takes income immediately or in the future.

The rider is designed for investors who seek a greater risk/reward tradeoff and provides income that is not driven by how high the contract value grows, but by how many times it grows. Additionally, there are no guaranteed annual increases in accumulation. The rider is powered by the Allianz Managed Volatility Portfolio of investment options. The current annual cost is 1.30% calculated on the purchase payments adjusted for withdrawals (total income value) for both single and joint life payout, and is subject to change on each quarterly anniversary, but will never be less than the minimum charge of 0.50% or exceed the maximum of 2.75% for single or 2.95% for joint.

4) Jackson Launches MarketGuard Stretch for Variable Annuities

Jackson National Life Insurance Company recently launched MarketGuard Stretch, a new option for policyholders of the Perspective family of variable annuities. It is a guaranteed minimum withdrawal benefit that allows beneficiaries the flexibility to spread distribution payments over their lifetime, keeping more money in a tax-deferred account for continued growth potential.

The withdrawal benefit can also help guarantee return of premium on a stretch contract over a number of years, regardless of investment performance. Policyholders can take up to 5.5% of their protected balance each year, or their stretch required minimum distribution, if higher, depending on their age at the time of the first withdrawal.

The options allow for distribution of the original investment amount without risking an excess withdrawal. In some circumstances, remainder beneficiaries may also elect to continue the MarketGuard Stretch benefit, guaranteeing they will receive at least the remaining protected balance back while remaining in a tax-deferred contract.